Thinking of BRRRring in a not ideal neighborhood.

[Justin Chan]

Hello all!

Kind of new to bigger pockets but love all tools and information! Thinking BRRRRing a 3 family unit in a not ideal neighborhood. I actually grew up in the neighborhood and the school systems are not the best. But I see a lot of change happening! A new train station just opened that is approximately a 9 min walk that goes to Boston, MA. A lot of lofts were just built close by and they are building more! Are rentals walking distance to train stations more valuable? Thank you in advance for the feedback!

[Sean Kelly-Rand]

Quote from:

Quote from @Zane Cress:

If you plan on putting everything you have into this deal with rising rates and uncertainty of a time line on the actual upgrade of the neighborhood then I would say it's risky. If you can do the work yourself and get the property dirt cheap then maybe it's worth it, but you need a lot of wiggle room on the numbers to make it a safe first deal. But if you see the upgrade coming it could be a major win in a few years. What is your personal risk tolerance? What is the maximum mortgage that rents could support after you cash out? No point in creating a 200k property if the rents can only support a 120k mortgage. 

 Property is 3 unit 8 bed 3.5 baths. It is listed for 285k. If I place an offer I wouldn't pay more than 250k preferably 225k or less. Full gut I am thinking 100-150k max. ARP 500k.

Unit 1- 3 bed 1.5 bath fully renovated min. rent $1700

Unit 2 - 3 bed 1 bath fully renovated min rent $1600

unit 3 - 2 bed 1 bath fully renovated min rent $1400

Definitely risky. I might just wait. Ive been just getting antsy.  

@Justin Chan - is this in the suburbs of Boston? Fall River/New Bedford or Lowell/Lawrence?

$285k sounds very cheap - that said I don't know the condition. $150K is not a "full gut" of a 3 family. Full gut of a decent sized triple starts around $300K but I would say closer to $450K for good quality reno... now $100K can completely 'resurface a property' - new kitchens, baths, sandfloors, paint etc... but you're not touching electric, plumbing, or moving walls, replacing windows, structural, etc... big advice is walk the property with a trusted contractor. 

The numbers work if reno is under $150K. 

No harm in waiting and saving up a little more either. 

@Lien Vuong , @Colin Kelly-Rand- what are you advising your clients? And how do the numbers look to you?